Dan Senor and Saul Singer: Start-up Nation

Dan Senor, a professional investor, is an adjunct senior fellow at the Council on Foreign Relations. He was a foreign policy adviser to former Governor Mitt Romney and the administration of George W. Bush. From 2003-2004, he was based in Baghdad as the chief spokesman for the U.S.-led Coalition in Iraq. Saul Singer is a columnist for the Jerusalem Post, where he also served for six years as editorial page editor. Before moving to Israel,he served as foreign policy adviser in both the U.S. House and U.S. Senate.
Dan and Saul are the authors of Start-up Nation: The Story of Israel’s Economic Miracle, out today. They have set up this site for the book. We thought the book would be of interest to our readers and invited the authors to explore themes related to the book. They write:

Missed in the oceans of ink written about the Jewish state is a staggering fact: Israel is the world’s quintessential start-up nation. Israel leads the world in technology start-ups per capita. More remarkable is that these start-ups have attracted more venture capital investments per capita – 2.5 times the US, 30 times Europe, 80 times India, and 350 times China.
Even more surprising is that one of the main sources of all this innovation is the Israeli military, and not in the way that one might think. Commercialization of military technologies is part of the story, but the greater impact is through Israeli culture and its connection to the military.
The military is where many Israelis learn to lead and manage people, improvise, become mission oriented, work in teams, and contribute to their country. They tend to come out of their years of service (three for men, two for women) more mature and directed than their peers in other countries. They learn “the value of five minutes,” as one general told us. They even learn something more uniquely Israeli – to speak up regardless of ranks and hierarchy if they think things can be done better.
When American tech executives encounter this sort of spirit it is invariably somewhat shocking. On his first visit to an Israeli start-up he had just bought, Paypal President Scott Thompson couldn’t believe his experience in all-hands meeting: “”Every question was penetrating. I actually started to get nervous up there. Junior employees had no inhibition about challenging how we had been doing things for years. I’d never seen this kind of completely unvarnished, unintimidated, and undistracted attitude. I found myself thinking, ‘who works for whom here? Did we just buy them, or did they buy us?’”
What Americans need to realize, though, is it’s not just Israelis who can be focused, brash, and driven. While almost every Israeli has served in the military, many Americans have never met a Marine. America has an important part of what makes Israel so dynamic and innovative, but doesn’t know how to tap into it: military veterans.
In Israel, every employer knows what it means to have been a company commander in the infantry or tanks or to have served in certain tech-oriented intelligence units. In the US, many interviewers would not know what to do with someone like Brian Tice, a U.S. Marine Corps captain when he decided that he wanted to make the transition to business.
By that time Tice was thirty, he had completed five deployments–including assignments in Haiti and Afghanistan–and was in the middle of his sixth, in Iraq. He wrote his essays for his applications to Stanford’s MBA program on a laptop in a burnt-out Iraqi building near the Al Asad Air Base, in the violent Al Anbar Province of western Iraq. He had to complete his application at odd hours because his missions always took place in the middle of the night.
Tice interviewed with Stanford between sniper operations and raids, and had to cut the interview short when mortars landed nearby.
More and more American military officers are applying for MBA programs and, like Captain Tice, are going to extraordinary lengths to do so. In 2008, of aspiring MBA applicants that took the Graduate Management Admission Test (GMAT), 6 percent had military experience. At the University of Virginia’s Darden School of Business, the number of military applicants rose 62 percent from 2007 to 2008. The first-year class in 2008 had 333 students, 40 of whom were from the military, including 38 who had served in Afghanistan or Iraq.
The Graduate Management Admission Council, which administers the GMAT, has made it a priority to better organize the path from war front to business school. It has launched its Operation MBA program, which helps members of the armed forces find B-schools that waive application fees or offer generous financial aid packages and even tuition deferrals for cash-strapped vets. And the council is even setting up GMAT test centers on military bases, one of which was opened in 2008 at Fort Hood in Texas; another is planned to open at Yokota Air Base in Japan.
Yet the capacity of U.S. corporate recruiters and executives to make sense of combat experience and its value in the business world is limited. Many simply do not know how to read a military résumé. Al Chase, an executive recruiter who specializes in placing veterans, employers have trouble understand the leadership experience that veterans have, such as high-stakes decision making and management of large numbers of people and equipment in a war zone. The reaction often is, “That’s very interesting, but have you ever had a real job?”
Junior commanders in America’s new wars — in Afghanistan and Iraq, especially — find themselves playing the role of small-town mayor, economic-reconstruction czar, diplomat, tribal negotiator, manager of millions of dollars’ worth of assets, and security chief, depending on the day.
And, as in the IDF, today’s American junior commanders are also more inclined to challenge senior officers in ways they typically would not have in the past. This trait is essential in any entrepreneurial economy. The willingness to challenge higher-ups is partly from serving multiple tours and having watched their peers get killed as a result of what junior officers often believe are bad decisions, lack of strategy, or lackluster resources provided by higher-ups.
As American military analyst Fred Kagan explained it, U.S. soldiers and marines “have caught up with the Israelis in the sense that a junior guy who has been deployed multiple times will dispense with the niceties towards superiors.” There is a correlation between battlefield experience and the proclivity of subordinates to challenge their commanders.
Given all this battlefield entrepreneurial experience, the vets coming out of the Iraq and Afghanistan wars are better prepared than ever for the business world, whether building start-ups or helping lead larger companies through the current turbulent period.
The US has incredible wellsprings of innovation, but they need to be tapped. Israel has a lot to learn from the US about building big companies. But there is a reason why so many of these companies have come to Israel looking for the innovations they need to compete in today’s global economy. As America tries to reboot, Israel is the place to look for how to build a comprehensive culture of innovation that can restore and sustain economic growth. And American business leaders should be looking, as their Israeli counterparts do, to their countrymen who served as soldiers and marines to provide the critical drive they need to lead and innovate.

Dan appeared on Meet the Press yesterday. He stuck around after the show to discuss the book with David Gregory. Bill Kristol has posted the video of Dan’s discussion here.